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Unformatted text preview: Expenditure Multiplier ISLM Model Remember that prices are assumed to be ﬁxed. (equilibrium in the money market) LM curve is the combinations of interest rates and aggregate
output for which
MD = MS IS curve is the relationship between equilibrium aggregate
output and the interest rate (equilibrium in the goods market) Let’s add money and interest rates to the Keynesian
framework The ISLM Model Aggregate Output ...
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